Telstra's hot spot step may spark rush

David Ramli

Telstra's move to spend tens of millions of dollars on a national Wi-Fi rollout is expected to trigger a rush of investment in the area among rival telecommunications companies, analysts say.

Telstra chief executive David Thodey will announce the plan on Tuesday in Sydney.

Fairfax Media believes the network will be rolled out around the country as a public network that will allow customers to better use their broadband services.

Telstra's Wi-Fi network will most likely use the company's extensive infrastructure network, which connects to almost every home and business in Australia.

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Wi-Fi networks are wireless connections that typically use copper and fibre broadband to carry internet traffic to and from telephone exchanges, which in turn means they can handle higher speeds and larger internet loads than can 3G and 4G networks.

Cafes and shopping centres often use Wi-Fi hot spots to attract customers. Telcos in Asia have long offered hot spots in crowded venues to boost broadband speeds and reduce the load on wireless tower networks that can slow down when overloaded.

CIMB analyst Ian Martin said many Australian telcos - including Telstra as recently as 2012 - had installed hot spots in dense city areas with limited success.

iiNet launched a plan for such a network in January, though chief executive David Buckingham said at the time it was more of a marketing service. AAPT also announced plans to provide Wi-Fi services in several locations but the trial was never extended beyond the Bondi Beach area due to a lack of funding.

''This kind of investment is unavoidable and from Telstra's point of view you might as well adopt it for use as infill capacity,'' Mr Martin said. ''Telecom New Zealand announced something similar either early this year or late last year, so it's quite common, particularly where you've got a lot of usage and there are constraints.''

While Telstra could end up cannibalising revenue from its 3G and 4G mobile services, the analyst said Australian customers had an insatiable appetite for mobile downloads. Offering free or low-cost Wi-Fi services for existing customers would also encourage them to pay more and stay loyal to Telstra.

''There's such a rapid growth in usage, this is probably an essential way to fill in a few areas and drag in a few more customers because Telstra's differentiator has been the breadth of its coverage,'' he said.

''For a relatively small investment it helps keep Telstra customers happier. Optus and TPG would probably do this though Optus is probably focusing on catching up with its 4G network and getting in-building coverage first.''